As we covered last year, the United States Supreme Court held in Epic Systems Corp. v. Lewis that employment contracts can legally bar employees from collective arbitration (and require instead individualized proceedings). The Supreme Court found that a provision forbidding collective arbitration violated neither the Federal Arbitration Act nor the National Labor Relations Act. This decision was a win for employers, as it continued the Supreme Court’s recent trend of enforcing agreements to arbitrate and enabled employers to specify that employees must each arbitrate their claims individually, rather than all together as a group.

Since then, as you might expect, employee arbitration agreements have become a hot topic for many employers. They’ve been a hot topic in the Supreme Court as well; in two different rulings issued in January 2019 (New Prime Inc. v. Oliviera and Henry Schein Inc. v. Archer and White Sales Inc.) the Court continued to shed light on the Federal Arbitration Act’s transportation worker exemption and to what extent parties may delegate decisions of whether a claim must be arbitrated or litigated in court to an arbitrator.

All of this activity related to arbitration provides a good opportunity to consider whether requiring your employees to arbitrate employment disputes is the right decision for your business. And, if so, what should you do to make sure your agreements with your employees are enforceable?

We’ll discuss the first topic – whether you should or should not require employees to arbitrate employment claims – in this Part 1, and we’ll cover the second issue in Part 2 (a “coming soon” blog post).

To start, what are some of the reasons you might want to require employees to arbitrate – rather than litigate in court – their employment-related disputes? Arbitration can be cheaper and faster, because discovery is much more limited than what is provided for disputes litigated in court. Pre-hearing motions are also more limited in arbitration as compared to in court; generally, a matter in arbitration will proceed much faster to a hearing on the merits.  Because of this, and due to the fact that private arbitrators generally do not have as much on their dockets, arbitrators can usually set a hearing date and reach a decision resolving the merits of a dispute faster than a court can.  Further, some employers find that having an arbitrator resolve disputes, rather than a jury, can provide more predictable results.  Unlike in court, where the parties have no input on which judge is assigned to hear their case and are subject to the opinions of a jury of their “peers,” there is no jury in arbitration and the parties have a say in which arbitrator will resolve the dispute. And although arbitration is not automatically confidential, it can be much more private than resolving a dispute in court because, for example, there are no public filings.

But arbitration isn’t for everyone or every situation. It can cause morale problems with employees, who are sometimes very concerned to find out that their employer is asking them to give up their right to a jury trial over a dispute that they may consider hugely important to them and their future career. Additionally, arbitration offers limited opportunities for appeal. While that can be a good thing if the arbitrator decides in your business’s favor, it is a double-edged sword if he or she does not. Arbitrators also tend to have a bit more room to fashion remedies that “split the baby,” giving the employee at least some measure of victory, which is less common in court.  Further, because of the limited discovery and ability to file pre-hearing motions, employers may not be able to learn about facts that help them evaluate the strengths and weaknesses of their case, so matters will generally either proceed directly to a hearing on the merits or settle without any opportunity to narrow an employee’s claims through motions practice (or have them dismissed altogether, which happens in a considerable percentage of employment lawsuits). Finally, some states place limitations or requirements on arbitration agreements, ranging from the relatively minor (such as requiring that employees specifically initial an arbitration provision in an agreement) to much more substantive (barring arbitration of certain claims, such as for sexual harassment, outright). Meeting these requirements can become complicated, particularly for employers who operate in multiple states. Although the Federal Arbitration Act generally preempts state law requirements that act as a bar to arbitration, this isn’t always a clear-cut determination and can force parties to engage in motions practice in court to determine whether the agreement is valid or if the dispute can be heard by an arbitrator at all – before ever even reaching the merits of a claim.

There are many practical and legal considerations involved in deciding whether to require that employees arbitrate employment-related disputes as opposed to resolving them in court. This is not a decision to be made lightly or without advice of legal counsel.  If you do decide to proceed in that direction, then you have to make sure your agreements to arbitrate are enforceable.  And that’s no easy trick either. Stay tuned for some thoughts on that topic and some additional issues to consider in Part 2.  In the meantime, consider reaching out to your favorite Troutman Sanders labor and employment attorney for guidance about whether arbitration is right for you and your workplace.

Do you monitor your employees using technology?  Would you consider making them wear wristbands or other devices capturing their every move?

This spring, news spread that Amazon had been granted two patents for a new wristband that appeared to be designed to do just that for its warehouse and fulfillment staff.  The patents indicated that the wristbands would track workers’ hand movements as orders were filled and provide “haptic” feedback through vibrations to guide workers to the correct items and shelves.  Although the company later released a statement indicating that the devices were intended only to be used as a hands-free, more efficient version of the handheld scanning devices commonly used by warehouse staff, the technology raised concerns among commentators that information gleaned from the devices would instead be used to monitor workers’ every move and inefficiency – even bathroom breaks.  Amazon isn’t alone.  A small technology company in Wisconsin, for instance, recently offered employees an opportunity to have microchips implanted under their skin as a replacement for RFID badge swipes at protected doorways and in the company cafeteria—and the majority of employees unhesitatingly agreed.

The above examples may seem far-fetched in the average workplace, but employers have always sought to monitor and improve their employees’ productivity, work habits, and communications.  Today, it’s not uncommon for employers to surveil their employees through technology in a variety of ways as a matter of course, including by using GPS tracking on employer-owned vehicles, recording telephone conversations with customers, scanning emails sent from employer-owned devices, or reviewing job applicants’ social media profiles.  But is it always a good idea?

Generally, employees have little expectation of privacy while on company grounds or using company equipment, including company computers or vehicles, so often, monitoring (with proper notice, as required) is not especially problematic.  Plus, technology has great benefits for employers, including in improving productivity and efficiency.  But it’s worth a few moments to consider how technology’s role in society and growing presence in the workplace implicates employee privacy concerns, and what the consequences can be for going too far.

So that you are prepared before the next big tech development hits your office, here are a few things to consider when weighing how your company should approach and balance surveillance and employee privacy concerns:

  • Consider the types of information and technology you intend to use. Different requirements may be applicable to certain types of information (social media sites versus credit reports from background checks, for example), and some states and local governments have begun proposing and passing legislation affecting surveillance of private electronic information that may apply, in some cases, to private employers.
  • Think about the implications of having and storing electronic data about your workers. What happens (and what are the practical and legal risks) if this data is accessed without authorization (and how should you respond if it is), and will you have a policy for responding to third-party requests for this type of information?
  • Finally, stay faithful to your workplace’s culture. While some monitoring can be a great tool to increase efficiency, too much (especially without prior notice and proper explanations) can foster distrust among employees.

This is a constantly evolving area of the law, and best practices can and should be tailored to your individual workplace. For more information and tips on recent legal developments in this area, reach out to your favorite Troutman Sanders employment attorney.

On September 7, 2018, the U.S. Department of Labor’s Bureau of Labor Statistics announced the most recent employment numbers for the United States.  As of August, total payroll employment had increased by 201,000, and the unemployment rate remained at 3.9%.  The positive trend has also impacted an often-overlooked category of potential employees:  disabled adults of prime working age.

Employment for this group has been steadily rising in recent years.  For example, the Bureau of Labor Statistics reported on June 21 of this year that 18.7 % of disabled adults of prime working age (25-54) were employed in 2017 (compared with 65.7% of those without a disability).  The news overall was good; the employment-population ratios for both persons with and without disabilities had increased from 2016 to 2017.

Highlights from the 2017 data included:

  • Nearly half of all persons with a disability were age 65 and over, three times larger than the share of those with no disability.
  • Across all age groups, the ratio of persons employed continued to be much lower for persons with a disability than for those with no disability.
  • In 2017, 32 percent of workers with a disability were employed part-time, compared with 17 percent for those with no disability.

Other reports have noted that people with disabilities tend to be employed at higher rates in regions with tighter labor markets where a larger share of the overall working-age population is employed and tend to have higher employment rates as their educational levels increase.

Although there is still plenty of room to improve, this increase in employment of disabled adults is part of a growing trend.  As one economist wrote recently, after many years (including during the 2001 and 2008 recessions) of relatively rapid increase in the number of Americans citing disability as a reason not to work, this number has begun to steadily fall for the past four years.  And, the news is good for the market as a whole; some economists have opined that the labor market’s ability to show this type of change and growth indicates that there is still room for employment numbers to continue to improve even further for everyone.  If that’s true, and the market continues to grow, it appears likely that more working-age adults with disabilities will seek employment, increasing the pool of applicants available to employers across the country.  Prudent employers should pay attention and take advantage of the increased opportunity to widen and diversify their workforce.  While there can be challenges in hiring workers with disabilities, many employers report that disabled workers are among their most loyal and hardworking, and have a much lower rate of turnover than non-disabled employees.  In a tight labor market, those factors have real value.

Pay equity is a hot topic – and not just in employment and HR circles.  Both inside and outside of the courts, the issue has gained national attention and is spurring legislators in states across the country to act. Recent developments are a timely reminder to all employers to start thinking proactively about pay equity and ensure pay is based on proper criteria (performance, experience, effort, skills) and never gender or other protected characteristics.

For instance, in March, a California Court made headlines after allowing a class action complaint alleging systemic pay discrimination on behalf of women in thirty enumerated job positions employed by a high-profile technology company to proceed, in part based on allegations that the company had a business-wide policy of considering new hires’ previous salaries when determining starting salary and job level.  Additionally, in a case that’s grabbing attention from lawyers and non-lawyers alike, Rizo v. Yovino, the Ninth Circuit Court of Appeals reversed course from an earlier decision and held that the employer could not use a female employee’s prior salary alone as the basis for her current salary.

Outside the courts, this year saw even greater attention paid to Equal Pay Day, celebrated in 2018 on April 10 – a date which symbolized how far into the year women must work to earn what men earned in the previous calendar year.

On the heels of these court cases and increased attention, several states have taken it one step further by proposing, and enacting, new or enhanced legislation centered around pay equity.  California was among the earliest to adopt a state pay equity law, but the trend has continued to gain momentum with other states, such as Massachusetts, Delaware, Oregon, and, recently, Washington and New Jersey, following suit.

For example, last month New Jersey enacted what some consider to be one of the strongest pay equity measures in the country.  The law, which will go into effect on July 1, 2018, bans unequal pay for “substantially similar work” and allows victims of discrimination to sue for up to six years of back pay.  Successful employee claimants will have the opportunity to seek monetary damages of triple the amount lost.  New Jersey’s law is considered comparatively strong because it prohibits pay disparities based upon any characteristic protected by the New Jersey Law Against Discrimination—so it is not limited to gender alone.

Likewise, in March, Washington state enacted an updated Equal Pay Opportunity Act.  The law, effective June 7, 2018, prohibits discrimination in compensation based on gender (although pay differentials based on a job-related factor or factors that are consistent with business necessity are not prohibited).  Employers also may not limit or deprive career advancement opportunities based on gender and may not require nondisclosure of wages (or “wage secrecy”) as a condition of employment.

These are just two examples of new laws targeting unequal pay; other states may enact similar laws (or even laws providing broader protections) moving forward—and you can be sure your employees will be paying attention.  Prudent employers will review their pay structures now and regularly to avoid potential problems later.  If you would like assistance reviewing your pay structure, please reach out to your favorite Troutman Sanders employment attorney and we’d be more than happy to assist.

 

When President Trump fired then-Secretary of State Rex Tillerson earlier this month, he did it in one of the most public ways possible: on Twitter.  The kicker? He had not told Tillerson, who was traveling in Africa at the time, about the decision in person before tweeting it.  (Although White House officials have stated that Tillerson was given the news in advance on a phone call with White House Chief of Staff John Kelly, Tillerson was not told face-to-face before the rest of the world found out). Tillerson’s “termination by tweet” offers a timely reminder to all employers about the right (and wrong) ways to handle the firing of employees.

Separating an employee can be a stressful process for everyone involved.  Prudent employers will keep in mind the following tips to handle the situation in an appropriate way:

Handle an employee termination in person.

Firing an employee by email or letter (or tweet!) might seem like the easy way out. But, even if the employment relationship ultimately is not working out, you owe it to your former employee to discuss the decision in person.

On that note: make sure this in-person meeting occurs in the office, in a private setting.  There is more possibility of confusion when someone is fired in a more informal setting, such as at a company event or offsite meeting.  Additionally, there is more possibility of embarrassment or even public displays of emotion by the employee when someone is fired in front of other people.

While there are some very rare circumstances that may require separating an employee in a way other than through a face-to-face meeting, those should truly be exceptional, and discussed with key HR leaders and legal counsel before they occur to make sure there is not a better way to handle things.

When possible, make sure you’ve given clear signs prior to termination that the employee’s performance is not meeting expectations.

It is important to have a truthful, business-related, and non-discriminatory reason to fire an employee.  When possible, back this up with a clear record of the employee’s behavior, whether it’s poor performance, a bad attitude, or something else, over time, and maintain those records. Make sure you share your thoughts with the employee in formal and informal reviews and evaluations before you fire them.  This gives them the opportunity to improve, and, if they do not, will help minimize the chances for surprise, anger and confusion as the employee will not be able to (legitimately) say they didn’t see (or at least couldn’t have seen) the termination coming.

Also, when firing the employee, make sure that your truthful, business-related reason for the termination is clearly communicated to him or her at the time of the termination.  This will become critical in the event the parties wind up in court.

Keep emotions in check.

Make sure that you never fire someone in the middle of a disagreement or other emotionally charged situation—you do not want a decision about someone’s employment to come out of the heat of the moment.  Take a moment (or longer) to cool down first and make a sound decision.

On the other hand, do not let your personal sympathies for the employee keep you from being clear (and standing your ground) once you have made the decision to fire them. Although you might feel better “letting them down easy,” such behavior will only lead them on, ultimately making the termination more painful and drawn out for everyone involved. Let them respond and ask questions, if they wish, and respond honestly and with courtesy, but avoid getting caught in an argument regarding the decision.

In sum, take a “what not to do” lesson from the President and make sure you keep the above tips in mind the next time you find yourself handling an employee termination.  If you need assistance in managing the process or have questions, reach out to your favorite lawyer – before you fire that problem employee.

Believe it or not, there’s a growing trend among some employers to offer a new benefit: “pawternity leave,” or leave for new pet owners.  Offerings range from a few days of leave up to a week or more, and might come in addition to other pet-related benefits, such as pet insurance, pet adoption consulting, bereavement leave—and even bring-your-pet-to-work policies.  So, should you join the trend?

Admittedly, while “pawternity leave” is certainly unique, this type of benefit might not work for many businesses.  However, its growing popularity offers a good reminder for all employers:  you should be thinking about the types of benefits your workforce might want—even if those benefits are a little untraditional. In doing so, the following tips can help.

First, know your workforce.  What are their values, what matters most to them, what do they enjoy?  Employers offering pet-related benefits know that the type of employees they hope to attract and retain value the presence of a furry companion in their lives—so much so that they consider their pet part of the family.  This might not be true for your workforce.  But if that’s the case, then what does top your employees’ list? If you don’t know, it’s worth finding out. Consider going straight to the source: conduct surveys to ask your workforce what benefits they’d like to see most. Not all suggestions may be viable, but they’ll provide valuable insight on your employees’ priorities either way.  Or, perform market research regarding similar companies to try and find out what matters most to employees in your industry.

Second, think outside the box.  Once you’ve got a handle on what your workforce wants, how can you best offer it to them?  Think creatively, and don’t be afraid to see what your competitors are offering.  “Pawternity leave” has been a popular benefit offering among employers who tend to attract a younger workforce and are in urban areas, likely because such employees tend to own pets in higher percentages.  But other employers might find that their workforce prefers different benefits.  Perhaps purchasing season tickets to a popular area sports team for employee rewards and use, stocking healthy prepackaged meals at the office, or providing college counseling assistance for employees with high-school aged children, might be better fits.

Third, recognize that a benefits offering doesn’t have to cost a lot of money to make a big impact.  Even a small change can really make a difference if it’s targeted at your workforce’s biggest priorities.  Regardless, employee satisfaction will often pay for itself in spades.  Plus, it’s certainly more cost-effective (and more beneficial) than paying for benefits that your workforce won’t use, or doesn’t appreciate.  Study after study has shown that happiness is key to productivity.  Happy employees are productive employees (who are also less likely to jump ship for a competitor).  Your employees are one of your most valuable resources, so consider what you can offer to ensure that they remain that way.  And heck, who wouldn’t want time off to play with a new puppy?